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This is the Life: Can we be too generous?

What happens when the non-profit sector has a negative — albeit unintentional — impact on the private business sector?

Unintended consequences. It’s a phrase that keeps coming to mind as I wrestle with an issue that is difficult to broach. What happens when the non-profit sector has a negative — albeit unintentional — impact on the private business sector?

Discussions at town council meetings in recent months have touched on the question and provided an opening to create a public discussion. Take a look at the community’s dwindling retail sector and the empty storefronts along Canyon Street and in the Creston Valley Mall and it is clear that our local economy is anything but strong. Which means we rely even more on non-profits.

The present town council has been examining the issue of permissive tax exemptions, just one of many public policies that can impact private businesses. In this case, council has the ability to declare all or a portion of the land and buildings used for public benefit to be exempt from paying property taxes. Churches, schools and many non-profit organizations get this status. But the town is going to have to tackle the fact that many of these groups now operate businesses in order to help pay their bills.

Many churches now have thrift shops, and some serve food and coffee. (Areas used for public worship are exempted by statute.) It’s a way to help offset expenses and it’s perfectly understandable. But should the portion of the property used for business be exempt from property taxes when similar businesses, often close by, are paying their full share? Councillors have been careful to point out, many times, that property tax exemptions equate to a donation by other property tax payers.

Churches are far from being the only organizations in competition with private businesses, though. Gleaners sells used goods, often deflecting them from the landfill and, in turn, passing on the profits to numerous other important non-profits. But there are private businesses that also sell similar goods. They pay property taxes, and pay for their inventory and salaries. They don’t have the advantage of receiving donations and being operated by volunteers.

Examples abound. When a non-profit plans a fundraiser, it might be a yard sale, a dinner, an auction or a night of entertainment. The yard sale competes with used goods stores, the dinner competes with restaurants, the auction competes with local businesses (often the same ones that donate the items or services) and the entertainment competes head-to-head with other venues that feature live performances.

I am always quick to acknowledge that our community operates on volunteerism. The generosity of the public, including the business sector, is astonishing and we are the better for it. And not all of the services provided by non-profits are simply the activities of a caring community. Many are a response to needs that were once provided for by government. Downloading of services to communities has created voids that citizens have taken on themselves.

I am old enough to remember a time when every community in the country did not have a food bank. The small proportion of people who couldn’t afford sufficient food was taken care of primarily by churches, which operated soup kitchens and handed out food to the needy. Now, thanks to a large number of economic factors and government policies, the idea of even the smallest town not operating a food bank is unthinkable.

Non-profits run entirely with the support of a community. If they aren’t filling a need, they won’t get financial and volunteer donations and simply die off. So it seems like a no-brainer to give them all the support we can, even if it means paying higher property taxes or shifting some of our spending decisions. When I buy a hotdog from a street vendor, I’m not just making a donation to a worthy cause. I am not going to a restaurant for lunch, which means my support of the volunteer vendor has cost a private business a customer on that day. When I buy a piece of art at a fundraiser, I am less likely to make a purchase from an artist. When I go to a fundraiser that features entertainment, it means I am less likely to go to a privately operated venue to catch a concert or a movie. If I help build public housing projects I could be contributing to empty apartments, suites and homes owned by the private sector.

The competition faced by the private sector is endless and often unacknowledged. The tax-subsidized public transit is a great service for the few who use it, but it also eats into the business of a taxi service that struggles to pay its bills. The same people who try to earn a living by transporting people are also paying the taxes that subsidize their competitors. Many businesses, including the Advance, have had a similar experience in facing tax-subsidized competition.

I’ve been a supporter, as a volunteer and a consumer, of non-profits and their fundraisers, for as long as I have lived in Creston. And that is not going to change. But I think it is important that we all be aware of how our community also relies on a healthy private sector that pays employees and taxes. We need to at least be aware of the complexity of a small community’s economics.

Lorne Eckersley is the publisher of the Creston Valley Advance.